Updated 7 November 2026
When a business buys from many small suppliers who cannot issue eTIMS invoices themselves, such as farmers, boda riders or casual traders, KRA offers two ways for the buyer to create the invoice instead: reverse invoicing and buyer initiated invoicing (BII). Both put the invoicing job on the buyer, but they work very differently. This guide explains each one using KRA’s own eTIMS guidance and shows which fits your business.
Sources: KRA’s eTIMS pages on Reverse Invoicing and Buyer Initiated Invoicing, read on 7 November 2026.
On this page
Reverse invoicing vs buyer initiated invoicing at a glance
| Feature | Reverse invoicing | Buyer initiated invoicing |
|---|---|---|
| Best for | Large buyers in structured supply chains, such as tea, coffee or dairy, and digital platforms | Buyers who occasionally buy from small sellers |
| How invoices are made | The buyer’s own billing system, integrated with eTIMS through OSCU or VSCU | The buyer’s eTIMS login via the KRA profile on eCitizen (“Initiate Buyer Invoice”), or a .csv upload |
| KRA approval | Required through a Know Your Customer (KYC) process | No separate KYC step described |
| Seller consent | Given once for the duration of the contract; buyer keeps the consent records | Given per invoice via USSD or SMS; seller has 30 days to accept or reject |
| Seller’s identity in eTIMS | A “secondary device” created for each seller | Seller is validated and, where needed, onboarded automatically |
| Record keeping | Buyer keeps invoice records for at least five years with an audit trail | eTIMS stores the invoices and logs every action |
How reverse invoicing works
KRA describes reverse invoicing as a tool that lets a registered buyer issue tax invoices on behalf of sellers for goods or services it receives. Invoices come from a billing system the buyer already owns and runs to pay small-scale sellers, linked to eTIMS through system-to-system integration (OSCU or VSCU).
KRA gives two kinds of invoice:
- A sales invoice on the seller’s behalf. KRA’s example is a dairy processor that buys milk from farmers and generates an eTIMS invoice for each farmer showing the quantity and price delivered.
- A commission or service invoice to the seller. KRA’s example is a taxi-hailing platform that, after a trip, issues the driver an invoice for its agreed commission.
To use reverse invoicing, the buyer must:
- be approved by KRA through KYC;
- run a trusted Trader Invoicing System that can integrate with eTIMS through an API;
- have written buyer-seller agreements and get each seller’s formal consent;
- validate each seller’s PIN and eTIMS status, send an SMS or email alert for every invoice, and issue credit notes to correct errors;
- comply with data protection law and be certified as a data processor and data controller;
- keep invoice records for at least five years.
Once the system is live, each seller gets an SMS saying a secondary device has been created for them, and can track invoices on their own eTIMS dashboard. KRA says buyers gain control and accuracy, faster reconciliation and batch invoicing. Sellers save on invoicing costs and get paid faster.
How buyer initiated invoicing works
Buyer initiated invoicing needs no integration. The buyer logs in to their KRA profile on eCitizen, selects “Initiate Buyer Invoice”, and enters the seller’s ID or PIN, invoice number and date, a description of the goods or services, and the unit price, quantity and total. Several invoices can be uploaded at once as a .csv file.
KRA validates the seller’s details and onboards them to eTIMS if needed. The seller then gets a USSD or SMS prompt and has 30 days to accept or reject; after that the invoice is automatically rejected. Approved invoices go to eTIMS in real time. KRA warns that misuse or fraud can lead the Tax Service Office to deactivate the buyer’s eTIMS immediately.
The legal basis for reverse invoicing and BII
KRA cites Section 16(1)(c) of the Income Tax Act, which requires eTIMS invoices before expenses can be deducted, and Section 23A(3A) of the Tax Procedures Act, which allows a purchaser to issue an electronic invoice on behalf of a small-scale seller. Penalties for deliberate misuse of data apply under Section 23A. In both models, buyer and seller sign a declaration of compliance.
Reverse invoicing or BII: which should you use?
- Hundreds of regular suppliers and an existing payment system (milk collection, tea or coffee, ride-hailing or delivery platforms): reverse invoicing, after KYC approval and integration.
- Occasional purchases from small sellers, such as a hotel buying from a local farmer: BII through your eTIMS login.
- Your suppliers can invoice themselves: neither. Ask them to issue normal eTIMS invoices; see our guide on how to generate an eTIMS invoice.
Without valid eTIMS invoices, the expense may not be deductible for income tax. For how eTIMS compares with older devices, see eTIMS vs ETR.
Frequently asked questions
What is reverse invoicing in eTIMS?
A KRA-approved buyer’s billing system generates eTIMS invoices on behalf of small-scale sellers, with their consent.
How long does a seller have to approve a buyer initiated invoice?
30 days, after which it is automatically rejected.
Do I need KRA approval for reverse invoicing?
Yes. Buyers must pass KRA’s KYC process and integrate a trusted invoicing system with eTIMS.
Who keeps reverse invoicing records?
The buyer, for at least five years, with an audit trail.
Prefer WhatsApp? Follow Business Radar on WhatsApp
Weekly, free. We only use your email for this newsletter and you can unsubscribe in one click. Privacy policy.
